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Well That Hasn't Happened Before - Exhibit 6
We have never, ever, seen a larger divergence between long-term earnings growth expectations and equity valuations...
As is extremely evident from the chart above there has historically been a strong relationship between the S&P 500 P/E and 5-year growth estimates. This makes sense as the valuation of the equity market tends to reflect both the short-term (next 12 months) and longer-term growth expectations for corporate earnings.
However, over the past year or so, growth expectations have rolled over dramatically while at the same time valuations (P/Es) have continued to surge ever higher.
The current gap between the two is clearly unprecedented.
For a sense of just how extreme this decoupling is...
Stocks still cheap? Translation - The S&P is about 600 points over-valued currently.
Chart: Bloomberg and @Not_Jim_Cramer
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Lots of things haven't happened before until recently. Like an empty baseball stadium during a pro baseball game.
I was at a Pittsburgh Pirates game in 1997 where only 2100 people showed up in a stadium that could hold 60k.
The FED printing Trillions for Friends and Family... I don't think that happened before...or a FED Chairman working at a HFT HedgeFund...
I miss Coupling. The IT Crowd too.
Have you tried turning it on and off again?
Aw - I can fix that chart for ya Jim. Instead of bird shot, try some Federal Vital Shok #2 buck next time...
This is totally consistent with the hypothesis I posted several times recently, and only yesterday* I said...
... shares in successful businesses and real assets that will survive the Monetary Reset, is the only place to park your ill-gotten gains. Bonds and associated Derivatives will crash & burn -- whose fire will be visible with the naked eye from the moon, so to speak.
I've given up on all Austrian/ZH metrics and porn charts, save one: The Yield of key bonds -- US and German, the last two standing before the Controlled Reset. Now... for you & I buying stocks may be risky (Up vs Down side potentials), because we cannot use Unbouncable Checks. Ours bounce, theirs do not. Caveat Emptor.
I'd look long and hard at viable assets that will endure the Reset, and I'd think for myself, rather than drink the Kool Aid from the Bull or Bear salesmen, or a charismatic "Elmer Gantry of Finance & Economics".
* Thu, 04/30/2015 - 12:22 | 6047192 Kirk2NCC1701
http://www.zerohedge.com/news/2015-04-30/one-heckuva-bull-market
Will Rogers: "I am more concerned with the return of my money than the return on my money"
I'll stick with PM's stored at home, it may not be a winner but at least I got my hands on it.
“It’s a racket. Those stock market guys are crooked.” ~ Al Capone
cvs
That chart looks like me before, then after taking viagra
This time is different. Look how many things we've never seen before.
Down 600 looks about right if you anticipate a test of the January 2013 bull-up W breakout.
None of this has happened before.
well ... that's because the chasm will be filled by share buybacks ...
unprecedented is the new unfathomable. that's right I just made that shit up right there.
Looks like December 2009 was the last time you said that.
BTFD
Again OMG, Another chart. Bonus chart. At last check, charts, graphs, every bullshit term, don't mean squat.
What happened today? That's right, everything went up. Who's really surprised by now? Please!
The author is trying to correlate the wrong factors. Here is the explanation:
http://www.ftense.com/2013/11/how-quantitative-easing-raises-stock.html
ALL I want to know is...When?
I don't know why it is so hard for folks to figure out that we are not dealing with an actual market? Euphemisms are deadly in this kind of circumstance. People are calling Open Market committee members economists when they are nothing but criminals carrying out a political agenda. This is a political wealth transfer, plain and simple. There is not an economic theory that even suggests doing what central banks are doing. If there is such theory find it and tell me about it.
Folks, lets please observe our institutions according to how they function rather than how they are defined.
Your IRA is nothing but a bag to to be held while the economy collapses.
Americans are really not this stupid but perhaps they have become too lazy to think.
James Quillian, Common Sense Economics, http://quillian.net/blog/
I think I see the future, but repeat the same routine
I think I used to have a purpose, but yet I think again
That might have been a dream, a voice lost in the din
Every day's the same, there is no love, there is no pain
I feel their eyes are watching, will we lose our ass again?
Sometimes we think we're happy here, sometimes we just pretend
I can't say how this all got started, but I'll tell you how it ends
My funds are low, my debts are high
I need to smile, but gotta sigh
Just one kiss before I go
I'll find a place for funds, I'll let you know
I'm leaving Wall Street, I won´t be back
I'm making moves - financial tracks
I don’t know quite where I'll end up
Somewhere warm, with any luck
Sometimes we think we're happy here, sometimes we just pretend
I can't say how this all got started, but I'll tell you how it ends
Historical charts doan me SHIT.
Historical data doan mean SHIT.
History doan mean SHIT.
Piss poor data reports such as Earnings and GDP doan mean SHIT.
Remember when Bond prices going down like the past few days caused a sizable correction?
Notice that today completely reversed yesterday. WTF!!
It doan mean SHIT.
All in this Zombie land called America now.
Absolutely 100 % fucked up markets. Patooey.
September 13, 2015.